Getting your own home is perhaps one of the biggest goals for most individuals. For most people this is a dream because of high prices of real estate. Even with a steady income, most individuals find it hard to purchase a new home because of financial constraints. Thankfully, home loans can ease this burden, as most financial institutions cater to this requirement.
Unfortunately, getting a housing loan may not always be as easy as it seems. Every institution lays down certain terms and conditions for you to be eligible for housing finance. It is, therefore important to make sure that you fulfill all of these criteria in order to obtain your loan without any hassle.
Here are a few things you should consider when applying for a home loan in order to ensure its approval.
Steady Income
Naturally, no financial institution would be willing to lend you money unless they can be sure of its repayment. For this reason, having a regular and steady income is one of the primary requirements for an individual to qualify for a housing loan. You will need to provide proof of your monthly income through salary slips or bank statements. This assures the lender that you are capable of repaying your loan.
Pending Debts
If you already have unpaid debts at the time of applying for a home loan, it will be difficult to get approval for the financial assistance. Most lenders will be reluctant to give you a loan, as it becomes harder to pay off the EMIs along with your existing debt. The added financial burden puts you at high risk of defaulting on payments and most banks will be reluctant to take on such risk.
Credit History
Even though you may be clear of debt at present, your past records are of equal importance. If you have failed to pay your credit card bills or loan installments in the past it affects you credit score. A poor track-record of repayment makes you an unreliable client for the financial institution, which may eventually cause them to reject your loan application. It is therefore important to maintain a good credit score if you plan to buy a home in the future.
Documentation
When it comes to housing finance, given the large sums of money involved, several documents are required for verification and transparency. Be sure to provide all these necessary documents to avoid any delays or complications. Make sure that there are no discrepancies in the documents that you provide and all documentation should be genuine. This significantly reduces the risk of your loan application being rejected.
Repayment Tenure
A longer repayment tenure reduces the amount you have to pay in monthly installments. As this relieves the financial pressure on your income to some extent, there is less risk of you defaulting on the repayment of the installments. Therefore, be sure to choose a longer repayment tenure as it increases your eligibility for the loan.
Age
Although it may seem unlikely, your age is a very important factor when it comes to eligibility for a housing loan or, at least, the amount of finance. Individuals between the ages of 21 and 40 years are likely to get a higher amount of loan principal. On the other hand, your capability to repay decreases as you near the age of retirement. As a result, the loan amount tends to be lower for individuals above the age of 40 years.
Now that you know all the essentials for eligibility, you can confidently apply for a home loan, and finally, make your dream home a reality!
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